Canadas looming fiscal squeeze

Continue to article content Concerns are mounting over whether GOP leaders can wrangle the votes to avoid a government shutdown next week — with Republicans feeling pinched on the right and the left. Defense hawks in the GOP, who say short-term spending bills cripple the military, are threatening to vote against another stopgap without a long-term deal in hand to increase Pentagon funding.

Canadas looming fiscal squeeze

The waves of retiring baby boomers are putting governments in an increasingly uncomfortable fiscal squeeze. Meanwhile, this growing bulge of seniors needs and demands more from their governments — most notably, health care and income support programs, such as Old Age Security.

Health care spending in particular increases significantly for people 65 and older. The result is that boomers are putting intense and growing pressure on government budgets.

Unless governments raise taxes substantially to counter the trend, provincial revenues will grow at roughly 3. This all coincides with an equally unfavourable spending outlook. In nearly all provinces, spending growth is likely to outstrip revenues in every province except Manitoba and British Columbia.

The provinces east of Ontario will be hit hardest by this looming squeeze, while the West will manage better. Worst off will be New Brunswick, which is expected to have the slowest potential growth rate and the highest pension and health care pressures, Mr.

The fiscal squeeze also raises troubling questions about inequity between generations.

Canadas looming fiscal squeeze

The boomers generally did very well while they were in the workplace, earning higher inflation-adjusted wages than Generations X and Y, and enjoying better pensions and benefits. These younger workers are being saddled with the task of paying for rising spending needs, mainly in health care, which are eating nearly half of provincial budgets.

The demographic forces are so powerful that governments must deal with the problem of rising health-care spending now, either by raising taxes or curbing costs. Future generations should not be expected to subsidize health care for baby boomers, he argues.

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Howe Institute has gone a step further by tallying the present cost of maintaining demographically sensitive government programs, such as health care, over the next 50 years. Younger workers are going to be paying more to get the same thing.

The most obvious way is to curb spending growth, raise taxes, or both. Bolstering the labour force, through increased immigration and keeping more seniors working, would prop up growth and the tax base.

Productivity gains would help, too. Governments will tax these assets as they are withdrawn by retirees. Pension plan conundrum Meanwhile, analysts have spent years studying and reshaping public pension plans to ensure they can withstand the double hit of a boomer onslaught along with rapidly rising life expectancies.

Canada Pension Plan contributions were raised significantly between andfor example, to ensure the worker pension plan could generate enough income to cover future needs.

CPPIB says it has earned an annualized average return of 8 per cent — or a 6. But he still questions whether it can continue to earn needed returns over the longer term if interest rates remain low.

At least CPP has a clear funding strategy. OAS costs are expected to rise from 2. The biggest current debate about retirement planning is not the fate of CPP or OAS, but how well boomers themselves will be able to finance their retirement years beyond the minimum floor of support provided by government programs.

The decline of workplace pension plans means just 24 per cent of private sector workers are now covered by a plan, leaving most people on the hook to fund their own retirements.

Gisele Bouvier is already struggling at age She was laid off from her information technology job in the federal government at age 62 and ate through a big part of her savings as she waited to collect OAS and CPP benefits this year. She listens to a lot of radio and volunteers her free time to work with anti-poverty group Acorn, which tries to secure affordable house for low-income earners.

Other researchers, however, say the effect will be less severe.

Base facilities deteriorating under budget squeeze

McKinsey said the groups most at risk of big drops in lifestyle are mid- to high-income earners without workplace pension plans, especially those with low savings. Low savings levels are not an isolated problem in the boomer demographic.

At age 56, Wayne Hassar is keenly aware of his remaining debt. The way forward Some experts point out that demographic projections of doom have been overcome by innovation before.

Most famously, demographer Thomas Malthus looked down the path of world population growth in the lateth century and predicted a global famine that never happened.

The Industrial Revolution did instead.Why today’s fiscal squeeze adds to the economy’s costs and imposes needless austerity The financial sector promises that privatizing roads and ports, water and sewer systems, bus and railroad lines (on credit, of course) is more efficient and will lower the prices charged for their services.

The employment rate is lower today than omy under our plan. Update of Economic and Fiscal Projections (November ). as they gen. as shown in Figure 2. for the task. Update of Economic and Fiscal Projections (November ).

expenditures would remain near the bot- . Sonos generated some $ million in revenue in their fiscal third quarter. The volume of products that they sold jumped %. I started to do the math, and I'm looking for a revenue increase.

And, many vehicles assembled in Canada are built with parts produced in the U.S. The vehicles are sold on both sides of the border. Brian DePratto is an economist with TD Bank.

He says if both sides impose protective tariffs, one in ten Canadian auto workers will lose their jobs over the next three years. Afghanistan faces a fiscal crisis due in large part to worsening domestic revenue shortfalls. Averting this crisis will require strong leadership from the new Afghan government that will be replacing the Karzai administration.

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The country’s revenue system and collections need to be improved, corruption reduced, new revenue sources developed and expenditures cut. TORONTO - The Canadian dollar extended a string of losses Wednesday as worries increased about whether there can be a quick resolution to the looming U.S. "fiscal cliff." The currency was down of a cent at cents US.

Canadian dollar losses accelerated after an early afternoon news.

Canadas looming fiscal squeeze
MLI Paper: Canada's Looming Fiscal Squeeze | Macdonald-Laurier Institute